Elon Musk will withdraw his $97.4 billion offer to buy OpenAI if the board of directors returns the artificial intelligence (AI) pioneer to a nonprofit "charity" model, court papers say.

Musk made an offer to buy the ChatGPT creator on Feb. 10, the Wall Street Journal reported. However, CEO Sam Altman quickly rejected it, saying OpenAI was "not for sale," AFP reported.

The filing states, "If the board of OpenAI, Inc. is willing to preserve the charitable organization's mission and provide for the removal of the 'for sale' sign from its assets, stopping its conversion, Musk will withdraw the offer. Otherwise, the charity must be compensated at the price an independent buyer would pay for its assets."

OpenAI currently has a hybrid structure, as a not-for-profit organisation and a money-making subsidiary.

The move to a for-profit model, which Altman says is critical to the company's development, has exacerbated ongoing tensions with Musk.

Musk and Altman were part of the 11-person team that founded OpenAI in 2015, and the former secured $45 million in initial funding.

Three years later, Musk left the company, with OpenAI citing "potential future conflict for Ilon as Tesla continues to focus on AI."

The enormous cost of designing, training and implementing AI models forced the company to seek a new corporate structure that would give investors equity and provide more stable governance.

Moving to a traditional for-profit company requires approval from authorities in California and Delaware, who will examine how OpenAI's non-profit portion is valued when it becomes a shareholder in the new company.

Current investors prefer a lower valuation to maximize their stake in the new company. 

Musk's offer, valuing the OpenAI nonprofit at $97.4 billion - roughly $30 billion above the level in current negotiations - appears designed to disrupt the company's fundraising efforts.

Musk's latest move to undermine his former ally came shortly after Altman appeared at the White House announcing his involvement in Stargate. This is a Donald Trump-sponsored AI infrastructure project in which he has partnered with Japan's SoftBank.

Musk, who plays a central role in Trump's White House, immediately criticized the $500 billion AI project. He claims the funding was not secured in an apparent rift with the US president. | BGNES